umbrella policy question

[bobbyr]

Of the claims I've observed, the insurance company attorney's always push for a stipulation to settle within policy limits. My observation has been when there is usually more than one plaintiff, and there are substantial injuries, the insurance company will ultimately offer up policy limits and tell them "you figure out how to divide it."

Keep in mind that $1,000,000 plus whatever you carry on the car or house liability adds up to a lot of money, especially when defense costs do not erode that limit of coverage.

helpful TY

 

[imnontrad]

Talk to an attorney. First of all, putting the rental property into a LLC may reduce your risk. I have heard some people create a different LLC for each property.
I have heard that an insurance company will work really hard to defend your case to avoid paying out 1 million - the same effort as if you had 2 million.

 

[ncbill]

Talk to an attorney. First of all, putting the rental property into a LLC may reduce your risk. I have heard some people create a different LLC for each property.
I have heard that an insurance company will work really hard to defend your case to avoid paying out 1 million - the same effort as if you had 2 million.

dependent on state law.

keep in mind LLCs were created to limit other members' liability for the actions of another member of the LLC.

so, IIRC, some courts are now skeptical there's any liability shield with a single-member LLC.

umbrella insurance always applies, however, and even with rental properties is obtainable at a reasonable cost.

 

[Stormy Kromer]

Insurers will defend you hard no matter what. It is the first line in any liability policy. If they don't they're subject to a bad faith claim themselves.

I've heard that most claims settle within policy limits. But some don't. An example I can think of is I neighbor of mine who crossed the rail road tracks at an uncontrolled intersection and caused damage to a BNSF locomotive. They sued him for the cost of a new train before he got home from the hospital. He had an adequate amount on his umbrella.

 

[COcheesehead]

I had a friend who hit someone in a crosswalk. The victim’s lawyer went after the umbrella and won. Which isn’t the end of the story. She cannot now get another umbrella as a result.

 

[PatrickA5]

Claims against individuals who have umbrella excess coverage settle within the total coverage limits.

If the defendant has $2 million in umbrella & $500k on the underlying auto policy, no matter how bad the auto accident a plaintiff will settle within the $2.5 million combined limit.

If the plaintiff tries to go for a higher settlement when an offer for the combined limits above is already on the table their contingency-fee attorney would fire them as a client.

I was offered $100K full policy limit for an auto accident. My lawyer left it up to me whether or not I wanted to try for more in court.

 

[ncbill]

I was offered $100K full policy limit for an auto accident. My lawyer left it up to me whether or not I wanted to try for more in court.

That's another reason I purchased umbrella...a good friend had his younger brother "borrow" his car, kid brother wasn't paying attention (not DUI), ran a stoplight or stop sign, and seriously injured a young mother in another vehicle.

So I added umbrella coverage as soon as my kids started driving.

None of us should be so arrogant to think we (or another member on our auto policy) could never be the cause of an accident.

Best to have inexpensive umbrella coverage in place so not only does it settle quickly but the injured party has quick access to funds given you or a family member are at-fault.

 

[PatrickA5]

I have a $1M policy, for my own protection but also so the other party is fairly compensated for what I've caused. I'm not sure how those with the minimum can live with themselves if they cause bodily harm to someone else and not have to pay for it - all to save a few bucks.

Having said that, I realize that not everybody can afford insurance.

 

[Stormy Kromer]

I have a $1M policy, for my own protection but also so the other party is fairly compensated for what I've caused. I'm not sure how those with the minimum can live with themselves if they cause bodily harm to someone else and not have to pay for it - all to save a few bucks.

Having said that, I realize that not everybody can afford insurance.

The person injured could very likely be a passenger in your car such as a close friend or family member. I want enough liability insurance to make sure they were compensated if I was negligent.

 

[street]

The person injured could very likely be a passenger in your car such as a close friend or family member. I want enough liability insurance to make sure they were compensated if I was negligent.

Very good point!! Again, thanks for your experience and knowledge you share.

 

[PatrickA5]

The person injured could very likely be a passenger in your car such as a close friend or family member. I want enough liability insurance to make sure they were compensated if I was negligent.

Are you sure your Umbrella policy would cover a passenger in your car if you were negligent?

 

[Dash man]

Are you sure your Umbrella policy would cover a passenger in your car if you were negligent?

Yes, it’s a liability policy that provides additional coverage above your standard auto coverage. Any medical coverage on the auto policy covers first, then auto liability, then the umbrella coverage kicks in.

 

[PatrickA5]

Yes, it’s a liability policy that provides additional coverage above your standard auto coverage. Any medical coverage on the auto policy covers first, then auto liability, then the umbrella coverage kicks in.

I sent my agent this question and I'll see what he says.

It's my understanding that liability/umbrella covers the other persons car/occupants. But, I could be wrong.

 

[PatrickA5]

Heard back from my agent. Her answer was interesting. This is State Farm in Oklahoma.

Question: Does my Liability coverage and/or Umbrella coverage cover injuries to passengers in my own car if I'm at fault?

Answer: If they are members of your household or listed on the policy, the liability doesn’t extend for them. If they do not live with you, liability would extend for them. So if I was to ride in the car, your liability would extend for me but not for the people in your household. The umbrella will follow suit with the liability as it is an extension of that coverage.

 

[Dash man]

Heard back from my agent. Her answer was interesting. This is State Farm in Oklahoma.

Question: Does my Liability coverage and/or Umbrella coverage cover injuries to passengers in my own car if I'm at fault?

Answer: If they are members of your household or listed on the policy, the liability doesn’t extend for them. If they do not live with you, liability would extend for them. So if I was to ride in the car, your liability would extend for me but not for the people in your household. The umbrella will follow suit with the liability as it is an extension of that coverage.

That makes sense. My wife can’t sue me if injured in an accident where I’m at fault.

 

[PatrickA5]

That makes sense. My wife can’t sue me if injured in an accident where I’m at fault.

Agent said in order to pay for our own medical/funeral costs, we'd have to buy Medical Payments coverage (MedPay). It would pay for us, passengers and household members. Just about anybody that would be in our car has medical insurance, so I'm not sure it's worth getting.

 

[Dash man]

Agent said in order to pay for our own medical/funeral costs, we'd have to buy Medical Payments coverage (MedPay). It would pay for us, passengers and household members. Just about anybody that would be in our car has medical insurance, so I'm not sure it's worth getting.

We’ve always had it. We don’t always know who has their own insurance or not that we may be driving around. We used it once when DW was in an accident and it paid for the ER visit and x-ray with no copay or coinsurance.

 

[PatrickA5]

We’ve always had it. We don’t always know who has their own insurance or not that we may be driving around. We used it once when DW was in an accident and it paid for the ER visit and x-ray with no copay or coinsurance.

Do you think it's worth it if we're the only two in the car and have Medicare?

Since we are the only two in the household, it sounds like regular liability insurance would cover other passengers.

 

[Dash man]

Do you think it's worth it if we're the only two in the car and have Medicare?



Since we are the only two in the household, it sounds like regular liability insurance would cover other passengers.

I guess I look at it like umbrella insurance. It’s cheap coverage. We often have others in the car and sometimes loan it out to family.

 

[ncbill]

Heard back from my agent. Her answer was interesting. This is State Farm in Oklahoma.

Question: Does my Liability coverage and/or Umbrella coverage cover injuries to passengers in my own car if I'm at fault?

Answer: If they are members of your household or listed on the policy, the liability doesn’t extend for them. If they do not live with you, liability would extend for them. So if I was to ride in the car, your liability would extend for me but not for the people in your household. The umbrella will follow suit with the liability as it is an extension of that coverage.

Yes, years ago i read an online post by a lawyer who pointed out umbrella policies usually have an "own household" exemption.

So that lawyer recommended boosting UM/UIM coverage to $1 million since that would pay (if necessary) were mom driving & her kids riding with her were injured.

I already have $500k combined UM/UIM since my insurer required me to boost limits to $500k/$500k to buy an umbrella policy.

So I guess I should call my insurer to see if it's cheaper to add another $500k in UM/UIM via my auto policy or via my umbrella policy.

 

[street]

That makes sense. My wife can’t sue me if injured in an accident where I’m at fault.

Exactly!!! Be insurance fraud.